Lockheed Trumpets $4B More In F-35 Cost Savings

DoD and defense industry representatives speak on the F-35 at Farnborough Air Show CORRECTED: Fixes CEO Marillyn Hewson’s name. Sigh… FARNBOROUGH: A pair of cost initiatives by Lockheed Martin, Northrop Grumman, BAE Systems and the Pentagon should save up to $4 billion over the life of the F-35 Joint Strike Fighter program, officials said here today. Frank Kendall, the head Pentagon buyer, the F-35 Joint Program Office, and Lockheed Martin’s CEO Marillyn Hewson declared the F-35 Blueprint for Affordability enough of a success to keep doing it. And they announced a new effort, the Sustainment Cost Reduction Initiative (SCRI). The three main companies building the F-35 — Lockheed, Northrop Grumman and BAE Systems — will invest $24 million from the original blueprint program and add up as much as another $170 million. “The additional two year investment by industry to further reduce production costs will help bridge us to the planned Block Buy,” Kendall said, referring to a plan to group allies and partners together to achieve economies of scale. The US would like to participate, but Congress has restrictions on multiyear purchases, which are governed by law and policy. For the second initiative, called the Sustainment Cost Reduction Initiative, the three companies plan to invest up to $250 million to reduce sustainment costs by 10 percent. That should save at least $1 billion for the five year period. So far, the affordability blueprint has yielded a total of $1.5 billion in savings across the Five-Year Defense Plan. Hewson made the most of her time in front of the press, saying that the F-35B “is taking the U.K. by storm.” The F-35A and F-35B both flew at the Royal International Air Tattoo last week. UK Prime Minister David Cameron saw a fly-by of the F-35B this morning. She said, “it’s time we build on that momentum. We are confident that by extending the Blueprint for Affordability for Production for an additional two years, our industry investment will yield savings in excess of $4 billion for the life of the program.” This is a pretty remarkable turnaround for a program that couldn’t get a plane here two years ago after an F-35A suffered an engine explosion. You can see the relief etched on the faces of the Lockheed team. People have lost weight, shed wrinkles and simply look, well, more relaxed. One official told me of the great weight that lifted off his shoulders when the aircraft all landed successfully here in the UK. The defense industry controls 35 percent of sustainment costs, and the three largest partners in the program will invest $250 million into projects directly related to sustainment. How? They’ll try block buys of spare parts and to create regional centers tied to the logistics system known as ALIS, Hewson said.

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Marilyn Hewson

Lockheed Trumpets $4B More In F-35 Cost Savings

Posted on July 11, 2016

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